MADRID, 10 Ene. (EUROPA PRESS) –
The vice president of the European Central Bank (ECB), Luis de Guindos, has acknowledged that the most recent data points to a slowdown in activity in the eurozone at the end of the year, confirming the possibility of a technical recession in the second half of 2023. .
In a speech given at the opening of ‘Spain Investors Day’, the former Minister of Economy described as “disappointing” the evolution of growth in the region, whose GDP contracted by 0.1% in the third quarter, and that the data suggest that it also fell in December “confirming the possibility of a technical recession in the second half of 2023 and weak prospects for the short term.”
In this sense, Guindos has highlighted that the slowdown in activity “seems to be general”, with construction and manufacturing being particularly affected, although he has anticipated that services will also weaken in the coming months as a result of weaker activity in the rest of the economy.
Likewise, although the labor market remains particularly resistant to the ongoing slowdown, the ECB Vice President has warned that the first signs of a correction are seen with the decrease in data on hours worked and vacancy rates, which which suggests that labor market adjustment may also affect the number of jobs.
Regarding the prices front, Guindos has warned, after the rebound observed in inflation in December, which reached 2.9% from 2.4% the previous month, of a slowdown in the pace of disinflation in 2024.
“The rapid pace of disinflation that we observed in 2023 is likely to slow in 2024 and temporarily stop at the beginning of the year, as occurred in December 2023,” he noted.
However, despite the rebound observed in December, the Spanish economist stated that “it was good news”, since 2023 still ended with an inflation rate just below 3%, while underlying inflation entered a clear downward trajectory and continued to fall at the end of the year to 3.4%.
However, for Guindos, wage pressures, the outcome of upcoming wage negotiations and the intensification of geopolitical tensions add uncertainty to the future trajectory of inflation.
“In 2023, much progress was made to curb inflation. However, more needs to be done to ensure a timely and sustainable return of inflation to our medium-term objective of 2%,” he warned.
As such, it has reiterated the view that the current level of interest rates, maintained for a sufficiently long period, will contribute substantially to the timely return of inflation to our target.
“Our future decisions will follow a data-dependent approach to determine the appropriate level and duration of restriction,” he added.
